DUBAI: According to the heads of the fund, Reuters, Copenhagen Infrastructure Partners. A Danish investment firm, is seeking to raise $3 billion for a new fund that will be dedicated to starting from scratch renewable energy projects in emerging and middle-income nations.
It recently launched the 14-year Growth Markets Fund II, which will focus on wind and solar energy as well as specialized investments like battery storage. And initiatives that convert electricity into carbon-neutral synthetic fuels—a process known as “power-to-X.”
Preqin, a data firm, reports that only one emerging markets greenfield renewables fund. The 2014 $3.26 billion Guangzhou City Development Industry Fund. Has raised more money than Copenhagen hopes to accumulate.
One of the main goals of the COP28 climate talks in Dubai is to get more funding to developing economies to help them make the transition to a low-carbon future. However, the majority of funds focused on climate change have directed toward safer, more stable returns in developed nations.
Although it has proven difficult to reach an agreement to phase out fossil fuels. Over 60 nations have supported a global initiative to triple renewable energy this decade.
Future emissions from the global economy will probably originate mostly from emerging and middle-income nations. According to Niels Holst, a partner at Copenhagen Partners and co-head of the fund, $2.8 trillion in investment will required by 2030 to meet cleaner energy goals. Which include at least tripling renewable capacity.
“The key driver in these countries is that they need power. The growth in demand for electricity is enormous,” he told Reuters. Adding that renewable energy often the cheapest energy source.
Yet financing is far short of what’s needed, with investors deterred by the risks involved. Only $550 million has raised this year for funds focused on renewable energy projects in developing countries. Against more than $1 billion last year and nearly $8 billion in 2020, Preqin data showed.
Rising inflation and interest rates have hit cleaner energy project returns in developed markets including Britain and the US. Holst said the fund is targeting investment returns “in the teens”. “The power needs to be affordable and by its very nature the returns can’t be too high,” he added.
He did not indicate a deadline for Copenhagen to have the money raised. Copenhagen, a Danish firm founded in 2012, oversees 12 funds and 26 billion euros ($28.3 billion) in assets.
The first offshore wind energy schemes in the Philippines that own 100 percent by foreign entities. And an offshore wind farm in Bangladesh are examples of recent development projects.
The majority of the roughly 20 projects that will pre-seeded in Copenhagen’s new fund are based in Asia-Pacific and Latin America.
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